Brussels Refers Bulgaria to EU Court over DTT Mux Deals

The European Commission demanded that Bulgaria ensures open and non-discriminatory access to digital terrestrial broadcasting infrastructure market. File photo

Bulgaria has failed to escape EU court over the controversial tenders for the operation of what will be the country's DTT multiplexes.

The European Commission announced on Thursday that it has decided to refer Bulgaria to the EU's Court of Justice over the assignment of digital broadcast spectrum.

The Commission found that the procedure followed by Bulgaria was based on disproportionately restrictive award conditions, leading to the exclusion of potential candidates.

This hampers competition in the future Bulgarian digital terrestrial television (DTT) infrastructure market, in breach of the applicable EU Directives on electronic communication, the European Commission said in an official statement.

The efficient reallocation of radiospectrum as a result of the transition from analogue to digital broadcasting (the 'digital dividend') is part of the EU’s policy objectives under the Digital Agenda.

"In order to ensure that this process leads to the entry of new players capable of enhancing competition in the market and expanding viewer choice, the Commission has adopted a set of rules for the allocation of this extra spectrum capacity. These rules require that spectrum is allocated under open, transparent, objective, non-discriminatory and proportionate criteria."

The Commission considers that Bulgaria did not comply with these requirements of the mentioned Directives when it assigned in 2009 five DTT broadcasting spectrum lots via two contest procedures, limiting without justification the number of companies that could potentially enter the market.

Moreover, it said, the selection criteria of the contest procedures were disproportionate, refusing applicants that had links with content providers (TV channels operators), including operators active only outside Bulgaria, or with broadcasting network operators, in breach of the three directives.

Should the judges at Luxembourg court rule against Bulgaria, the country may be forced to pay hefty fines, worth up to EUR 200.000 per day.

Tense EU Countdown

The European Commission issued in March a final warning to Bulgaria over the tenders and said the country will face the EU highest court unless it informs it of the measures taken to address the breach of EU Law.

It demanded that the country ensures open and non-discriminatory access to digital terrestrial broadcasting infrastructure market.

The deadline for Bulgaria's replies expired on July 21.

Bulgaria has awarded the licenses for its multiplexes to only two companies - Latvia's Hannu Pro (four) and Slovakia's Towercom (two).

The Commission considered that Bulgaria did not comply with the requirements of the Competition Directive when it assigned in 2009 the five spectrum lots available for digital terrestrial broadcasting via two contest procedures, limiting without justification the number of undertakings that could enter the market concerned.

According to Brussels the selection criteria of the contest procedures were disproportionate and therefore not in line with the requirements of the Competition, Authorisation and Framework Directives.

Applicants were not allowed to have links with content providers (TV channels operators), including operators active only outside Bulgaria, or with broadcasting network operators, the EU executive body said.

Second Warning

The European Commission decision took the form of a reasoned opinion, the second step in infringement proceedings under Article 258 of the TFEU.

Brussels launched the infringement procedure in May 2011 following conflicting requirements for the eligible bidders in the mux contests, which drove away Austria's Oesterreichischer Rundfunksender GmbH & Co KG (ORS).

The requirements in fact made possible a near monopoly on the mux market as all companies which were granted licences are linked in one way or another to Tsvetan Vassilev, majority owner of Bulgaria's Corporate Commercial Bank.

At first it was not clear who stands behind the foreign investors Towercom and Hannu Pro, but soon the names of Tsvetan Vassilev, head of Bulgaria's Corporate Commercial Bank and Irena Krasteva, a media mogul, believed to be funded by the bank and ethnic Turkish leader Ahmed Dogan, popped up in all deals.

New Tender

In a bid to prevent legal action by the European Commission, Bulgaria decided at the end of December 2011 to hold a tender for yet another multiplex, its seventh.

The government has boasted that the new amendments will allow companies such as Austria's ORS, which have TV channels outside Bulgaria, to participate in the new DTT contest.

The Commission welcomed Bulgaria's recent announcement of the launch of a tender procedure for the assignment of this spectrum.

The Commission however said it expects Bulgaria to publish the conditions of the tender as soon as possible, so that potential new entrants can prepare their applications, be selected and enter the market before the date set for the analogue switch off, September 1, 2013.

The Commission said it will monitor that the tender conditions are in line with the Directives and allow effective entry into the digital terrestrial broadcasting infrastructure market.

Local experts however say that the new procedure is a mere attempt to throw dust in the eyes of Brussels officials.

The seventh multiplex will be just a collection of frequencies and its holder - in a much more disadvantaged position than Hannu Pro and Towercom, which have already grabbed the lion's share of the market, according to them.

Bulgaria's communications watchdog is obliged to prepare the package of documents for the new tender on September 1, 2013 under legal amendments that parliament hurriedly adopted in the last days of 2011.

This is also the deadline for the analogue switch-off in the country even though a new delay is very likely.

Until then the government is expected to splurge BGN 300 M on freeing frequencies currently held by the military.

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